Three Strikes and You're Out! Georgia's New Law on Employer Responses to Unemployment Insurance Claim Notices

Client Bulletin #520

Georgia employers may have received a
surprise in their mail: a letter from the Georgia Department of Labor stating
that, effective October 22, 2013, Georgia employers had to comply with a new
rule concerning state unemployment insurance claim notices.

The New Rule

The rule states that an employer or employer's agent who
does not "timely and adequately" respond to "three (3) or more individual
claims" within the "current calendar year" will have its account charged and
"may not be relieved of charges, regardless of whether the associated
determination to pay benefits is later reversed on appeal or if an overpayment
is established." The rule makes an exception for an employer who did not "timely
and adequately" respond for "substantial good cause." The rule defines
"substantial good cause" as "extenuating circumstances which prevented the
timely or adequate filing by the employer, or the employer's agent, as
appropriate, and . . . such extenuating circumstances were beyond the employer's
or the employer's agent's control."

The "substantial good cause" standard seems
to be difficult for employers to meet, so employers should plan to respond in a
timely fashion to all state unemployment insurance notices.

The practical effect of this rule is that
Georgia employers will have their account with Georgia Department of Labor
charged if they don't respond timely or adequately (meaning completely)
to every UI claim notice, which could also affect the employer's rating.

Why Did Georgia Make This
Change?

Georgia's new law was adopted to comply
with a federal law enacted in 2011.

On October 21, 2011, President Obama signed
into law the Trade Adjustment Assistance Extension Act of 2011.
The main focus of the TAA is to provide retraining and other enhanced benefits
to workers who lose their jobs as a result of increased imports. A portion of
the Extension Act, called the Unemployment Insurance Integrity Act, requires
states to implement measures designed to ensure prompt and complete employer
responses to claims for unemployment. The required measures apply to all
claims for unemployment, not just claims that might be eligible for TAA
benefits.

States that do not comply risk losing
federal subsidies for unemployment benefits, and employers would risk losing the
ability to receive state unemployment insurance credit against their Federal
Unemployment Tax Act ("FUTA") taxes.

The TAAEA requires that, by October 21,
2013, states issue laws that provide that "an employer's account shall not be
relieved of charges relating to a payment from the State unemployment fund if
the State agency determines that": (1) the employer was "at fault for failing to
respond timely or adequately" to a claim or request for information on a claim
for compensation, and (2) the employer established a "pattern" of failing to
respond to such requests. The TAAEA applies to "agents" as well as "employers,"
but does not define "agent."

In Georgia, an employer who does not comply
with the UI integrity rule will be subject to the sanctions set forth in the
rule.

Each state has taken its own approach on
implementing laws that conform with this statute. If you should have any
questions about how this law will affect your business in Georgia, please
contact Jeff Thompson or Sarah Phaff in Constangy's Macon
office, or any attorney in Constangy's Atlanta office.

What's on the
Horizon?

The Georgia Department of Labor implemented
this rule because the state legislature did not pass the appropriate legislation
within the required time frame. Accordingly, there will probably be new
legislation in 2014. We will keep you posted!

About Constangy, Brooks
& Smith, LLPConstangy, Brooks & Smith, LLP has
counseled employers on labor and employment law matters, exclusively, since
1946. A "Go To" Law Firm in Corporate Counsel and Fortune
Magazine, it represents Fortune 500 corporations and small companies across
the country. Its attorneys are consistently rated as top lawyers in their
practice areas by sources such as Chambers USA, Martindale-Hubbell, and Top One
Hundred Labor Attorneys in the United States, and the firm is top-ranked by the
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lawyers partner with clients to provide cost-effective legal services and sound
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and Wisconsin. For more information, visit www.constangy.com.